Despite increasing practical similarities and combined scale, India’s plans to merge key infrastructure funding bodies, NaBFID, IIFCL, and NIIF, are stalling due to departmental jurisdiction disputes within the finance ministry, challenging the nation’s infrastructure financing consolidation efforts.
India’s push to consolidate its infrastructure financing arms has run into resistance inside the finance ministry, even though the logic for bringing them together is increasingly hard to ignore. Officials are reluctant to advance a three-way merger involving NaBFID, IIFCL and NIIF because the first two fall under the Department of Financial Services while NIIF sits with the Department of Economic Affairs, despite all three operating in the same broad funding space, according to Business Standard.
NaBFID and IIFCL are both development finance institutions that borrow in domestic and overseas markets to lend to projects, while NIIF works more like an investment fund, pooling money from large institutions in India and abroad for viable infrastructure assets. S&P Global Ratings has described the government support behind NaBFID in terms that closely mirror its earlier assessment of IIFCL, underlining how similar the two institutions have become in practice.
That overlap is reinforced by scale and structure. NaBFID’s loan book rose sharply to Rs 1.027 trillion in FY26 from Rs 97 billion in FY23, while IIFCL’s loan book stood at Rs 805.14 billion in December 2025 and was projected to cross Rs 1 trillion by FY27. Both institutions employ about 275 executives and have been designated by the government as development finance institutions and by the Reserve Bank of India as all-India financial institutions, while their non-performing asset levels remain low, making a merger easier from a credit perspective than a rescue exercise.
NIIF would bring a different strength: institutional capital. In June, the central government doubled its commitment to new and upcoming NIIF funds to Rs 60,000 crore, and the vehicle has already drawn backing from investors including sovereign wealth funds, pension schemes and development banks such as the Abu Dhabi Investment Authority, Temasek, the Asian Infrastructure Investment Bank and the Asian Development Bank, according to a government release. By contrast, IIFCL has raised funds abroad through its UK subsidiary, while NaBFID has so far relied on domestic markets but is also building credit enhancement tools with the World Bank and the ADB to support infrastructure bonds and widen the investor base.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
